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(a) The value of the Hong Kong dollar would not be shaken. credibility was based on the Exchange Fund. He understood that the Exchange Fund was greater than the amount of Hong Kong dollars issued. There should be no change in the monetary situation.
(b) The land market would not be shaken. The Chinese side had agreed that land leases could be granted by the British Hong Kong authorities whose terms would run 50 years after 1997. They had also agreed that the British Hong Kong authorities could use the income from the grants corresponding to the period after 1997 on condition that such grants would be used for land development and capital construction in Hong Kong and not as government expenditure.
(c) The British Hong Kong authorities would not increase the number of public servants and substantially increase their salaries and pensions in the transitional period. This would be a heavy burden for the SAR.
(d)
The British Hong Kong authorities would not impose during the transitional period a government team, ie officials serving in the Government, on the future SAR Government.
He
(e) The British Hong Kong authorities would persuade those concerned to prevent the withdrawal of British capital from Hong Kong. There had been the flight of Jardines capital. had heard that the Hong Kong and Shanghai Banking Corporation (HKSBC) was also thinking of removing its capital from Hong Kong. American and Japanese capital would not leave Hong Kong. In fact if other parties withdrew their capital the Americans and Japanese would move in. He hoped the Governor would persuade the HKSBC not to remove their capital from Hong Kong. If British capital took the lead, this would create a serious impact, both economic and political.
12. The Secretary of State said it was very important that they should understand one another on this point. They shared a common objective. Hong Kong had achieved its present prosperity and stability because of the extent to which the UK had cared for all these things.
13.
The Secretary of State said it was only fair to Sir SY Chung and his colleagues to say that though they might not agree over the way various things were described, they too cared about Hong Kong.
14. The Secretary of State continued that he had described some of the appointments of Hong Kong people to senior posts. Continuity was important. There should be as little interruption as possible in this, as in every other respect. The Governor's prime concern and duty was to achieve all the things the two sides agreed on. This would be achieved because of HMG's interest in maintaining stability and prosperity, and their desire to hand over a stable and prosperous Hong Kong, taking account of all the things mentioned by Chairman Deng. The Secretary of State referred to his experience of four years
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